(Reuters) Britain suffered its first ever sovereign ratings downgrade from a major agency on Friday, after Moody’s stripped the country of its coveted top-notch triple-A rating, dealing a major blow to finance minister George Osborne.

Moody’s cut Britain’s rating by one notch to Aa1 from Aaa, with a stable outlook, blaming weak prospects for Britain’s economy over the coming years which have thrown the government’s deficit reduction strategy off course.

Austerity has been the watch word for Osborne’s fiscal policy since his Conservative-led coalition came to power in 2010 after an election in which he vowed to defend Britain’s triple-A rating, which keeps down borrowing costs.